* Canadian dollar rises 0.3% against the greenback
* Price of U.S. oil increases 0.8%
* Canadian bond prices gain across the yield curve
* Canada-U.S. 2-year spread narrows by 1.8 basis points
By Fergal Smith
TORONTO, June 24 (Reuters) - The Canadian dollar rose against the greenback on Monday, adding to gains from last week when domestic data showing inflation at a seven-month high supported the view that the Bank of Canada would hold off from interest rates cuts over the coming months.
In contrast, expectations have been building that the United States and the euro zone may ease monetary policy as early as July. the exception of Canada and Norway "we have seen a big dovish shift in policy expectations across the board," said Alvise Marino, a foreign exchange strategist at Credit Suisse (SIX:CSGN) in New York. "If the data hold up in Canada, there is space for the Canadian dollar to outperform against other G10 currencies."
Last month, the Bank of Canada said there was evidence that a slowdown in the domestic economy was temporary. Money markets see about a 50% chance of an interest rate cut by December. BOCWATCH
Canada's annual inflation rate rose to 2.4% in May, which was the first time since October 2018 that the rate had exceeded the central bank's 2.0% target. wholesale trade report for April is due on Tuesday and April gross domestic product data is due on Friday.
At 4:15 p.m. (2015 GMT), the Canadian dollar CAD=D4 was trading 0.3% higher at 1.3182 to the greenback, or 75.86 U.S. cents. The currency, which rose 1.4% last week, traded in a range of 1.3178 to 1.3220.
The loonie has rallied about 3.5% since the start of 2019, which is the best performance among G10 currencies.
The U.S. dollar .DXY fell on Monday against its rivals after sustaining its biggest weekly drop in four months last week, while the price of oil, one of Canada's major exports, was boosted by market concerns about the possibility of a conflict between the United States and Iran. crude oil futures CLc1 settled 0.8% higher at $57.90 a barrel.
Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR rose 4.5 Canadian cents to yield 1.409% and the 10-year CA10YT=RR was up 24 Canadian cents to yield 1.459%.
The gap between Canada's two-year yield and its U.S. equivalent narrowed by 1.8 basis points to a spread of 32.8 basis points in favor of the U.S. bond. Last Thursday, the spread touched 30.8 basis points, which was the smallest gap since February 2018.